Reps Move to Address Escalating POS Fraud, Unlicensed Crypto Operations

The House of Representatives Ad-hoc Committee examining the economic, regulatory and security implications of cryptocurrency adoption and Point-of-Sale (POS) operations has voiced fresh concerns over what it described as a rapidly escalating fraud crisis threatening Nigeria’s financial system.

During a resumed investigative hearing on Monday, the Committee Chairman, Hon. Olufemi Bamisile, said engagements with key stakeholders had exposed “deep gaps” within Nigeria’s digital financial ecosystem. These gaps, he noted, have left citizens increasingly vulnerable to financial crimes and security threats.

Bamisile revealed that the Committee had received numerous reports detailing the activities of unprofiled POS agents, cloned terminals, anonymous transactions and poor Know-Your-Customer (KYC) procedures. These issues, he warned, have fuelled widespread fraud across POS networks nationwide.

“We are concerned about the growing rise in fraud associated with POS operations,” he said. “Unprofiled agents, cloned terminals and weak KYC practices continue to expose citizens to preventable dangers.”

He further raised alarm over the infiltration of unlicensed cryptocurrency dealings into POS operations, stating that some operators now provide crypto-related services without regulatory authorisation. Such activities, he said, pose “serious red flags,” including risks linked to money laundering, terrorism financing, data breaches and the misuse of payment platforms originally designed for basic transactions.

According to Bamisile, the Committee was also briefed on cases where fraudulent companies were registered with the Corporate Affairs Commission (CAC) using stolen National Identification Numbers (NIN) and Bank Verification Numbers (BVN) to open accounts and launder illicit funds through unverified POS channels. He added that some fintech firms store sensitive financial data on foreign servers, undermining regulators’ ability to audit transactions, trace suspicious activities and enforce compliance—ultimately posing significant national-security risks.

Despite the concerns raised, Bamisile assured industry operators that the investigation was not intended to stifle growth. He acknowledged that the sector faces regulatory fragmentation, overlapping institutional mandates and inconsistent policies. He said the Committee aims to propose legislation that harmonises regulatory oversight, strengthens security safeguards, improves consumer protection and supports responsible innovation.

The Committee will continue interfacing with regulators, fintech firms and security agencies before submitting final recommendations to the House.

At the hearing, the National President of the Association of Digital Payment and POS Operators of Nigeria (ADPPON), Mr. Paul Okafor, warned that Nigeria’s POS ecosystem had reached a “critical emergency point,” with fraud escalating to levels that now threaten national security.

He noted that the sector’s expansion—from 50,000 POS operators in 2017 to more than 2.3 million today—far outpaced regulatory capacity, which he said grew by “less than 10 percent” within the same period.

“This imbalance is what has produced the crisis we are facing today.
The regulators, especially the CBN, are not incompetent; they are overwhelmed by the sheer speed and scale of growth,” he said.

Citing Nigeria Inter-Bank Settlement System (NIBSS) data, Okafor reported that POS, digital-payment and banking channels lost N17.67 billion to fraud in 2023, affecting over 80,000 customers. He said the situation worsened significantly in 2024, with losses climbing to N52.26 billion—an increase of N34.59 billion in just one year.

Attempted fraud across financial channels, he said, rose by 338 percent, while POS channels accounted for 26.37 percent of all reported cases. Industry tracker FITC also recorded a 95 percent surge in POS-related fraud in Q4 2024.

“More than 38,000 POS fraud cases were officially reported in one year,” he noted.
“Unofficially, we estimate that over 70,000 cases go unreported because victims simply give up.”

Okafor added that criminals increasingly use POS agents as cash-out points for illicit funds, including kidnap ransom payments.

“In some states, security agencies report that nearly 40 percent of kidnap ransom payments pass through informal POS cash-out channels. This is no longer a fintech issue; this is a national security threat,” he said.

He urged the Committee to compel the Central Bank of Nigeria (CBN) to immediately implement systemic reforms, warning that failure to act would undermine financial inclusion, erode public trust and destabilise the country’s payment ecosystem.

To stabilise the sector, Okafor recommended three urgent measures: mandatory Nigeria Police Force–NCCC Cybercrime Clearance Certificates for all POS operators; compulsory CAC registration for every POS business to ensure traceability; and required membership of recognised trade associations to enforce discipline, training and self-regulation.

According to him, these recommendations align with global best practices in India, Kenya, Brazil, South Africa and the United Kingdom—countries that maintain strict oversight, police vetting and continuous certification to curb fraud.

“No country leaves its financial system open to millions of operators or puts it in the hands of foreigners without strict controls. Nigeria must not be the exception,” he said.

Okafor noted that POS services now reach virtually every household, market and community across the nation.

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